Message Boards Digest

February 4, 2022

Here are the most recently added topics on the BenefitsLink Message Boards:

cathyw created a topic in SEP, SARSEP and SIMPLE Plans

Controlled Groups as Applied to SEP Arrangements

"Entity A is an LLC (taxed as a partnership) owned 99% by John Smith, and maintains a SEP. Entity X is a partnership. One of the partners (with a 10% partnership interest) is a single member LLC (Entity B) owned 100% by John Smith.

The SEP must cover all related/controlled employers. Since Entity B is a disregarded entity (as a single member LLC), is John Smith deemed the 10% partner of Entity X and there is no control? Or since John Smith owns 100% of Entity B and 99% of Entity A, is this a controlled group?

John has SE earnings from Entity A, but a loss from Entity B. If the entities are controlled (and therefore both must be covered by the SEP) I would net the earnings from both for purposes of determining any SEP contribution and 415 limits. If the entities are not controlled, and since only Entity A adopted the SEP, I would only use SE earnings from Entity A for determining the contribution.

Which is the correct analysis?"

1 reply so far   |    Click Here to Add a Reply

ERISA Rookie created a topic in 401(k) Plans

Plans Merged But Prior Plan Made Higher Match Than Plan Document Provided -- Correction Needed?

"I have a client who merged two 401(k) plans starting 1/1/22. Plan A (the surviving plan) provides for an employer match of 100% up to 5% of a participant's compensation. Prior to the merger, Plan B's plan document called for a discretionary matching contribution at the end of plan year. Turns out, for 2021, Plan B was administered using a 2% match every payroll.

Of course, the Plan B's plan documents were not amended accordingly. Plan B participants were notified of the change in ER match (which was administered in a non-discriminatory fashion and was more generous than what the plan document provided for). Are corrective measures needed here?

Are we permitted to retroactively amend Plan B following completion of the merger (which was effective 1/1/22)? If so, do we have to resurrect Plan B to amend since it merged with Plan A effective 1/1/22? Or, can we simply amend surviving Plan A to reflect the fact that the prior Plan B was administered during 2021 using a 2% match? Is that even necessary, given the fact that participants received an increased benefit in a nondiscriminatory manner?"

3 replies so far   |    Click Here to Add a Reply

Ananda created a topic in Retirement Plans in General

Prenuptial Agreement and Forced Waiver of Spousal Consent

"A couple signs a prenup foregoing all claims to each other's qualified plan benefits. But IRC Reg. Section 1.401(a)(20) is clear that prenups or other agreements entered into before marriage do not satisfy spousal consent requirements and case law supports this.

The prenup I am examining specifically states that, after marriage, each spouse agrees to waive spousal consent pursuant to the QJSA rules. Thus, it would seem to me that the plan participant could go to state court and, based on the contractual provisions of the prenup, get a judgment requiring the spouse to waive spousal benefits.

My view is that ERISA would preempt such a state court order because it would impact plan benefits and plan rights. Further, the order would not qualify as a QDRO and hence would not need to be followed by the plan. Agree?"

4 replies so far   |    Click Here to Add a Reply

thepensionmaven created a topic in Form 5500

New York Hurricane Ida/FEMA Extension Through February 15 for Form 5500-SF Filing But DOL Balking

"Parts of New York have the Hurricane Ida/FEMA extension through February 15, 2022. We have correctly marked under Special Extension - 'New York-Hurricane Ida-FEMA-4615-DR' and so far, only one client has received an email from DOL advising that Form 5500-SF for 2020 has not been received, although it has been. We have the DOL acceptance of the filing, answered the email and attached a copy of Form 5500-SF. Anyone else receive a similar DOL email or letter?"

No replies yet   |    Click Here to Add a Reply

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